BOSTON (TheStreet) -- Small-cap stocks have outperformed blue chips this year as investors preferred riskier growth names. TheStreet's quantitative equity model, which ranks stocks based on fundamentals and performance, just upgraded these small-caps to "buy."
3. Main Street Capital
manages a portfolio of equity and debt in private middle-market companies. It is structured as a "business development entity" and seeks to generate income for its shareholders. The shares yield 9.4% with a payout ratio of 130%.
: Fourth-quarter profit tripled to $1.7 million, or 15 cents a share, as revenue decreased 7% to $4.6 million. The operating margin declined to 80%. Main Street Capital has $31 million of cash and $65 million of debt, akin to a debt-to-equity ratio of 0.5.
: Main Street Capital has advanced 49% during the past year, outpacing U.S. indices. It trades at a price-to-earnings ratio of 13, a price-to-projected-earnings ratio of 12 and a price-to-book ratio of 1.3, 14%, 22% and 39% discounts to industry averages.
: Of analysts covering Main Street Capital, two rate its stock "buy" and three rate it "hold."
expects the stock to advance to $16.
Janney Montgomery Scott
, rating it "neutral," expects it to drop 22% to $12.50.
2. Broadpoint Gleacher Securities
( BPSG) is a full-service investment bank focusing on middle-market companies. It offers capital-raising, research and trading services. During the past three years, Broadpoint Gleacher has increased revenue 64% annually, on average.
: Fourth-quarter net income quintupled to $9.8 million, and earnings per share quadrupled to 8 cents, hurt by a larger float. Revenue grew 55%. The operating margin doubled to 21%. Broadpoint has $25 million of cash and $99 million of debt.
: Broadpoint has risen 7% during the past 12 months, trailing major benchmarks. It sells for a price-to-projected-earnings ratio of 9.3, a price-to-book ratio of 1.6 and a price-to-sales ratio of 1.5, 40%, 28% and 49% discounts to peer averages.
: Of researchers following Broadpoint Gleacher, all five rate its stock "buy."
projects a share price of $10, leaving a potential 137% return.
Bank of America
expect it to gain 90% to $8.
1. Allied Nevada Gold
explores for gold in Nevada. It operates the Hycroft mine, which is expected to produce 250,000 ounces a year by 2012 at an average cost of $425 to $450 per ounce. After suffering a net loss in 2008, Allied mounted a profitable turnaround.
: Allied swung to a fourth-quarter profit of $18 million, or 24 cents, from a loss of $53 million, or 92 cents, a year earlier. Revenue soared to $16 million. Allied Nevada has $92 million of cash and $6 million of debt, equal to a debt-to-equity ratio of less than 0.1.
: Allied Nevada has surged 185% during the past year, more than U.S. indices. It trades at a price-to-projected-earnings ratio of 23, a price-to-book ratio of 5.5 and a price-to-sales ratio of 29, sizable premiums to metals and mining industry averages.
: Of analysts evaluating Allied Nevada, four rate the stock "buy" and three rank it "hold."
predicts the stock will advance 43% to $24.17.
rates the stock "sector perform" and believes it will gain another 7% to $17.99.
-- Reported by Jake Lynch in Boston.